Purchasing Training – The Power of Negotiating for What You Want

You hear, read, and see this sort of title a lot, right? If your story is like mine, which it is, you landed in purchasing by accident. And you report to people who landed in purchasing by accident.

And so we were taught that negotiations are all about dominance. It’s all about who wins in the end. If you win big, then you can lean back, put your feet up, smoke a cigar, and be pictured in a glossy negotiation training advertisement that extolls the virtues of being able to throw your weight around and win.

Well, the 1950’s called, and they want their negotiation practices back. Fast forward to the 21st century. Suppliers and the supply chain are an integral part of your company’s success.

Read this twice: It is no longer your company that gives you the competitive edge in the marketplace, it is your supply chain that does.

And if you agree with that, then how much sense does it make to keep trying to get “an unfair advantage” over the companies that are pivotal to your company’s success in the marketplace? I just can’t believe this stuff is getting perpetuated still.

And so the pendulum can swing too far the other way too. Even a grammar school student can sacrifice on price in negotiations to make a supplier feel happy over the deal. That doesn’t take any talent, and it results in a Win/Lose deal, with the supplier on the winning end.

“Splitting the pie down the middle” isn’t the answer either, because neither party gets what they wanted out of the deal, which is the very definition of Lose/Lose.

So where do we go from here? The ultimate key to influence is coming at things from the other party’s perspective. For as long as you are pushing your agenda as the goal, you will always lose, even if you win short term.

You have to know the other party’s motivations, strengths, and weaknesses. Will we use this against them? NO. This information is used, coupled with your own objectives, to create a Win/Win deal.

Now there’s a term that is overused and means nothing anymore: Win/Win.

So what does it mean? Throw out everything you’ve heard until today. It means meeting your high level TCO objectives, while making the supplier feel good about the deal.

That means you can’t cave in big TCO areas like price just to make them feel good about the deal. It also means that YOU DON’T KNOW what it takes to make them feel good about the deal until you do lots of information gathering.

In the West, we are famous for not doing information gathering about the people involved in negotiations. We like to rush into negotiations and manage things in a militant fashion, negotiation item by item. We spend very little time understanding the other party’s motivations, because we are really only interested in our own.

This is a mistake and needs to stop, at least for your big strategic deals. And so, you have to take that time, understand the other party’s motivations, strengths, and weaknesses, and you need to figure out what concessions you can make that will make them feel good about the deal, in return for you meeting your high value TCO objectives.

Said differently, you have to write the supplier’s victory speech. What is it going to include? How will you make them look like a hero in front of their boss? How will you do that in a way that you still look like a hero in front of your boss? How will you do all this while knocking it out of the ballpark from a TCO perspective?

Forget everything else you’ve ever learned. What I’ve described above is THE ART AND SCIENCE OF NEGOTIATIONS, and you need to get good at it now. Now go off and do something wonderful.